Write Three Paragraphs Highlighting Week Seven Db
In this discussion board, we will analyze the Snap IPO: SnapIPO Presentation.pptx
POST #1 : In your own words, write three paragraphs highlighting three major takeaways from the case. Be as specific as you possibly can. You will not be able to see any posts until you post first. Reference the slide number when referring to your takeaway.
AT LEAST: Research the SNAP IPO a little bit more. Evaluate financial news on SNAP within the past year. Respond to another person’s post with an article or video reinforcing that post or extending the conversation. Specifically, is this an example of a successful IPO? Why or why not?
** note
Find article Try to find something within the last 3 months or so. and Respond to another person’s post
respond to (As I went through the PowerPoint, it was interesting to see how Snap Inc. started off and how it developed to where it is now. Even Spiegel, Bobby Murphy and Reggie Brown from Standford University first started an app called Picaboo. When Brown left the company, Speigel and Murphy changed the name to Snapchat then later on to Snap Inc. The firm measures itsadvertising revenues by the number of average daily users’ times the average revenue per user. In 2016 the firm had 158 million DUA’s with an annual ARPU of $2.39 that came to $378 million in advertising revenue. By 2020, Morgan Stanley predicted it would generate $4.9 billion with an increase of 236 million DAU’s and an ARPU of $20.72. In 2016 the company inquired revenues of $405 million but lost $515 in net income. Even though their revenues grew up by 600%, their losses also increased by 38%.
In 2016, Snap chose Morgan Stanley and Goldman Sachs to be their lead underwriters. To enhance Snap’s Financial flexibility and increase capitalization, Snap underwriters would get a fee of 2.5% of the amount raised. Early 2017, Snap decided to sell 145 million new Class A common shares with non-voting rights and existing shareholders would sell another 55 million of the same shares. Spiegel and Murphy would still own majority of Class B and C shares while controlling 89% of the voting rights if their predictions of selling 16 million of Class A shares was correct. After the offering there would be 1.4 billion shares outstanding. But there were many concerns with the offering. This included no voting rights, prices seemed to high, there was strong competitors eager for the same advertising dollars and that Snap relied a lot on their suppliers. Snap went public at $17.00 per share on the NYSE but closed 44% higher at 24.48 on the first day of trading. This caused the firm to have a market capitalization of $34 billion.
It was also interesting to see how the SEC regulations came into effect in this IPO deal. Itmandated that investment banks, such as Morgan Stanley and Goldmen Sachs, should be separate from equity research. This was to ensure analyst compensation was not tied to banking fees so stock recommendations were not suggested just for banking fees. Taking all this into consideration, I would not take part in purchasing stock from Snap. They seemed to have a strong start on the day they went public, but their stock has been staggering at the $7 mark. Maybe in the beginning I would have since it was such a popular app, but it has seemed to die down a lot due to competitors such as Instagram and Twitter. Hopefully in the futuretheir stocks with get closer to where they were when they started.